NSF, or Non-sufficient funds, are payments that have been received that are rejected by the bank as the account tied to the payment does not have sufficient funds to be paid out. These are often referred to as "bounced checks." This blog will detail how to set up and utilize the NSF functionality in Dynamics 365 for Finance to reverse the payment and mark it as NSF.
Setup - Bank Account
There is some preliminary setup that needs to be done on the bank account for NSF functionality to work. Navigate to Cash and bank management > Bank accounts > Bank accounts
. Open the Bank account where you receive customer payments.
There, in the Payment management FastTab, you can mark a specific charges group and the name of the payment journal type you want to use for NSF payment reversals.
|Updating the bank account for NSF transactions|
Setup - NSF Fee
Setting up a Charges group for your NSF payments will allow you the flexibility to charge a fee for any payment that comes back from the bank as having not-sufficient funds.
First, you will want to set up a Charges code. You can find Charges codes at Accounts receivable > Setup > Charges setup > Charges code
|Add a Charges code for NSF|
Second, you will want to set up a Charges group. Charges groups get set up at Accounts receivable > Setup > Charges setup > Customer charge groups
. This is what gets defined on the bank account.
|Create an NSF Charges group|
Then, you will want to set up an Auto charge. Auto charges get set up at Accounts receivable > Setup > Charges setup > Auto charges
. Here, you will want to define if the charge will occur at the header or line level. Set the Account code to Group and assign the Customer charges group that you created to the Auto charge. Then, in the Lines section, select the Charges code you created and define the amount you want to charge when a customer has an NSF payment.
|NSF Auto charge setup will add a charge to a Customer's account when NSF occurs automatically |
Setup - Reason Codes
Additionally, there are reasons codes that are required when creating NSF payment reversals. These reason codes can be found under General ledger > Journal setup > Financial reasons
When setting up a reason code for NSF, you will have to select both Bank and Customer for the reason code to show up on your NSF transaction.
|Financial reasons used for NSF need both Bank and Customer selected|
Mark Payment as NSF
Now that the setup is complete, you will want to mark your payment as NSF and apply the reversal of the payment to the Customer account.
First, on the Customer record, navigate to the Collection tab in the ribbon to open the Collections page for the Customer.
|Navigate to the Collections page on your Customer record|
Once on the Collections page, find your payment transaction, select it, then click NSF payment.
|NSF payment on the Customer's Collections page|
You will get a pop-up stating that you are going to add the auto-charge we created above to the Customer account.
|NSF fee being added to the Customer account|
Next, you will select the NSF Reason code we created above (Financial reasons).
|Select your Reason code for the canceling of the NSF payment|
Once complete, you will get a message stating that the payment was canceled and that a Customer payment journal was created for the fee associated with the NSF payment.
|Payment has successfully been canceled!|
Once you post the journal for the fee, you can view the transactions on your Customer account and see the original transaction, the payment reversal, and the NSF fee.
|Original transaction, payment reversal, and NSF fee on the Customer transactions list|
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